Under the Turkish Commercial Code No. 6102, an agent is defined as “the person who intermediates or directly concludes contracts concerning a commercial enterprise in a specific region or area, on a continuous basis”. Accordingly, agency contracts are legal relationships established by enterprises with independent businesses for the purpose of selling goods or providing services.
By its own nature, agency contracts tend to include restrictions for agents, in order for the principal enterprise to be able to protect its goods, services and/or brand. However, the question of whether the restrictions under the agency contracts fall under the Article 4 of Turkish Competition Law No. 4054, since it essentially prohibits agreements between enterprises that restrict or may restrict competition in a market, necessitates an evaluation based on whether agents bear commercial and financial risks, the scope of the maintenance and service obligations, and the impact of market economic conditions.
· The Risk Factor
Restrictions under the agency contracts generally do not fall within the scope of Article 4. On the other hand, a key factor in determining whether an agency contract falls within the scope of Article 4 is identifying whether the agent bears any commercial or financial risk. If the agent does not assume any financial or commercial risks in its activities carried out on behalf of the principal, this leads to the agency's activities being considered as part of the principal’s operations, thus falling outside the scope of Article 4. Moreover, the risks that an agent bears in order to perform its own agency operations are not considered as risks taken due to the relation between the agent and the principal.
In contrast, if an agency contract includes conditions where the agent incurs costs related to the purchase or sale of goods or services, is responsible for after-sales services or assumes financial risks such as stock financing; the contract is considered to have a competition-restricting nature and is evaluated to fall under Article 4.
· Maintenance and Service Obligations of the Agents
Maintenance and service obligations are commonly encountered in agency contracts. The Guidelines on Vertical Agreements, published by the Turkish Competition Authority, indicate that if an agent is required to provide maintenance, repair, or warranty services, this will result in addressing the relationship between the parties of the agency contract under the Article 4.
The reason for this assessment is that taking on the obligation to provide after-sale services demonstrates that the agent has exceeded its role as an intermediary and is acting like a direct service provider, which implies that the agent assumes significant financial and commercial risks.
Similarly, in the Competition Board decision numbered K. 23-60/1160-415 and dated 21 December 2023, it was stated that “where authorized service providers are held financially liable for damages arising from maintenance and repair services and are required to arrange insurance policies, such an obligation goes beyond the traditional intermediary role of an agent. Instead, it is evaluated that this implies the agent is directly providing the service and assuming financial responsibility for its outcomes”. As a result, the agency contract was deemed to fall within the scope of Article 4.
· Non-Compete Obligation and its Market Closure Effect
In order to prevent unfair competition, the principals foresee non-compete obligations for agents under the agency contracts. On the other hand, non-competition obligations relate to inter-brand competition and may have an anticompetitive effect if they have a closing effect in the relevant market in which the goods or services subject to the agency contract are sold. For example, it is accepted that the market closure effect increases with the duration of the non-compete obligation; however, agency contracts must be evaluated case-by-case to duly assess this effect. Therefore, while determining the anticompetitive effects of a non-competition obligation on the market, factors such as the market position of the supplier and competitors, the scope and duration of the non-competition obligation, the market position of the buyer and barriers to entry should be considered.
· Conclusion
When evaluating the competition-restricting nature of agency contracts under Turkish Competition Law, the key consideration is whether the agent bears any financial and commercial risks. In this context, maintenance and service obligations should be carefully examined, particularly when the agency activities exceed traditional intermediary roles. In cases where non-compete obligations are present, the potential market closure effect must be evaluated. Ultimately, agency contracts should be assessed on a case-by-case basis, considering the obligations and commercial risks involved, and interpreted in alignment with the fundamental principles of competition law to determine whether they fall under the scope of Article 4.
Authors: Hatice Ekici Tağa, C. Sümeyye Uçar, Burcu Çirkinceli
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